Walmart scales up in-home Delivery-as-a-Service

Walmart has announced that it is to expand its ‘in-home’ grocery delivery service in the US, providing more evidence of the importance of alternative delivery solutions for retailers and e-commerce platforms. Its plans will extend the service to 30 million US households involving the hire of 3,000 full time, employed drivers and a fleet of all-electric vans.

The service involves the delivery of fresh groceries and what the company calls ‘everyday essentials’ directly into the homes of customers, with drivers placing ordered items into the kitchen or garage refrigerator as required. It will also provide for the collection of returns, reducing unnecessary trips saving customers and the retailer time, cost and reducing carbon emissions.

The driver gains entry into the customer’s home through a one-time passcode generated by the InHome app which pairs with smart entry technology. The driver videos the whole delivery by a chest mounted camera to ensure security.

Another interesting feature is the Delivery-as-a-Service (DaaS) subscription model being employed. Customers pay either $19.95 a month or $148 a year with no additional fees. It is also notable that Walmart has eschewed the ‘gig-economy’ model, using only permanent, employed staff rather than sub-contractors. The drivers receive a premium to store staff of $1.50 an hour and qualify for full employment benefits, reflecting both the company’s need to convince customers of the quality and reliability of the delivery staff entering their homes, and the tight labour conditions.

As Walmart states, the company is committed to creating a low-cost last-mile delivery network focused on density, speed and sustainability. The strategy it has taken to develop its InHome service reveals the various challenges it and the rest of the industry faces, whether in the USA or other developed markets. Its use of employees and electric vehicles addresses the critical issues of ethics and sustainability, side stepping potential regulatory barriers of diesel bans and employment law. Its on-demand nature saves customers time, an increasingly important factor in consumer buying behaviour, and will allow Walmart to capture a significant part of a fast-growing market. It also allows the company to mitigate the problem of returns which impacts on supply chain and logistics costs as well as creating unnecessary carbon emissions. Finally, the subscription model will help lock customers into its services, an important factor in its fight with Amazon, as well as indicating that ‘free delivery’ may be becoming a thing of the past.

The initiative will certainly not be cheap given the employee, vehicle acquisition and technology costs involved. However, the company obviously believes that there is a major opportunity in this market niche, an assumption based on three years of trials. If it is right, the on-demand sector, in the US at least, could soon become even more competitive for many other rivals such as Lyft and Doordash as well, of course, as Amazon.

Source: Transport Intelligence, January 6, 2022

Author: John Manners-Bell